Chile's government backs Codelco in dispute with Anglo American mining company

posted 11 Nov 2011, 12:12 by Mpelembe
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updated 11 Nov 2011, 12:13
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Chilean mining giant Codelco and Anglo American face off in a deepening spat.

LOS ANDES (REUTERS) - Chilean copper giant Codelco and Anglo American on Friday (November 11) further dug in their heels in a deepening spat.

Codelco insistes it has a 49 percent option in Anglo American Sur, while Anglo says that has been reduced to 24.5 percent after a surprise stake sale.

Codelco vowed to exercise its 49 percent option in the company's southern Chilean assets -- but Anglo said it won't sell that much.

Anglo shocked Codelco and investors on Wednesday when it announced it sold a 24.5 percent stake in its southern Chilean copper properties to Japan's Mitsubishi Corp for $5.4 billion, signaling an aggressive stance in negotiations with Codelco, the world's top copper producer.

"The Chilean government will fully back the rightful actions taken by Codelco. We will energetically watch over the interest of the state," Mining Minister Hernan de Solminihac said on Friday.

Codelco will take legal action if Anglo rejects its option in January, CEO Diego Hernandez said on Friday.

"We are surprised that Anglo-American has taken the measure of selling. They had knowledge of the risk and we are going to defend the interest of our company and the interest of all Chileans," Hernandez said at a press conference Friday, flanked by Chilean lawmakers who said they supported Codelco's stance.

"We can't accept an aggression of this magnitude. Codelco has been transparent and has done what it had to do. Then comes an arrogant CEO (from ANGLO AMERICAN) to say the contrary," Copper Workers Federation President Raimundo Espinoza said Friday.

Codelco said in October it had secured a $6.75 billion bridging loan from Japan's Mitsui & Co to allow it to exercise its option and had cautioned Anglo American it must honor the pact.

Chile's government will back Codelco's efforts and the showdown could end in the courts, Finance Minister Felipe Larrain reiterated on Friday, but said the state company would decide on potential legal actions.

Chile is a significant part of Anglo's operations and Anglo American Sur accounted for 41 percent of its copper production in 2010. Anglo has invested around $2.8 billion to develop Los Bronces.